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Dwolla now suspending accounts like PayPal

PayPal was such a great idea at the beginning. It brought the freedom of cash transactions to the Internet with minimal invasions of privacy. It was a simple concept, but over the years as it grew and grew it seemed to lose it’s original vision, feeling more like any other cumbersome bank account. Maybe that’s why co-founders Peter Thiel and Elon Musk moved on to more revolutioanry projects after PayPal was purchased by Ebah. Peter Thiel is no involved with the SeaSteading movement and Eloc Musk is involved with SpaceX.

Many who sought more economic freedom than PayPal was offering flocked to their competitor Dwolla, especially in the Bitcoin community. For a while Dwolla made it easy to exchange from Bitcoin to dollars and back, while PayPal was distinctly hostile to people using their service that way. But now it seems that Dwolla is going the way of PayPal

Dwolla has begun closing the accounts of people operating unlicensed Bitcoin exchanges and even private individuals affiliated with those exchanges, and their going after some of the heavy hitters in the Bitcoin community.

On January 23rd Dwolla suspended the account of StompRomp founder Josh Harvey. Josh stands accused of using Dwolla to move funds in and out of MtGox, and sending some money he owed to a friend who also used Dwolla to move funds in and out of MtGox. That’s it. MtGox is perhaps the largest Bitcoin Exchange site out there. MtGox is to Bitcoin what Kitco is to Silver. Of course, using Dwolla this way is a common practice, but targeting Josh Harvey sends a message to the community. Dwolla called it “suspicious activity” but it’s clearly intended to have a chilling effect on Bitcoiners using Dwolla.

It’s an odd, highly-regulated world that Dwolla has made the choice operate inside of. Where some scenarios appear black and white, rules and procedures can often add layers of grey. Of course, it’s on us to find new ways to balance convenience, safety, and privacy with these requirements and see through the grey, but it’s important to note that we’ll always err on the side of caution. We understand that being misunderstood by our own users sucks, but if it means protecting the network and the community, we’ll do it.

As soon as I saw “highly-regulated” I knew what was going on here. The State places a lot of vague rules on those providing payment services, because fundamentally the government is anti-commerce and demands a piece of every pie, and Dwolla isn’t willing to go to bat for economic freedom. To avoid a crippling indictment from the State they will suspect anything ever remotely questionable. It’s like an employer who fires both employees whenever there’s any whisper of sexual harassment because the cost of a lawsuit is more than the value of any employee.

What this means is that, like PayPal, a Dwolla account can be frozen, and the user can lose access to their funds, without evidence, without due process, and increasingly without any semblance of customer services. So if you use either of these services I high recommend you don’t leave any money in them you’re not willing to lose.

If anything this only further demonstrates the need for alternative currency.

In grade school Davi refused to recite the pledge of allegiance because he didn't understand what it meant. He was ordered to do as he was told. In college he spent hours scouring through the congressional record trying to understand this strange machine. That's where he discovered Dr. Ron Paul. In 2007 he joined the End The Fed movement and found a political home with the libertarians. The Declaration of Independence claims that the government derives its power “from the consent of the governed." He does not consent.